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Fenwick & West's Silicon Valley Venture Capital Survey Reveals 64% Increase in Valuations

May 24, 2006 (Mountain View, CA) – Fenwick & West LLP, one of the nation's premier law firms providing comprehensive legal services to high technology and life science clients, today announced results of its First Quarter 2006 Silicon Valley Venture Capital Survey.

The survey analyzed the valuations and terms of venture financings for 101 technology and life science companies headquartered in the Silicon Valley/San Francisco Bay Area that reported raising capital during the first quarter of 2006.

The results showed that Fenwick & West's Venture Capital Barometer™—the measurement of change in share price of Silicon Valley companies funded during the quarter compared with their previous financing round—was up 64%.

"The results showed a continuation of the strong positive trend in venture valuations that we have witnessed over the last two-plus years," said Barry Kramer, partner in the firm and co-author of the survey. "This is the largest increase we have seen since the survey began."

The Fenwick & West Survey also disclosed that up rounds exceeded down rounds for the ninth consecutive quarter. "Up rounds significantly outpaced down rounds 74% to 15%," said Kramer. "That differential is also the largest since our survey began."

An up round is one in which the price per share at which a company sells its stock has increased since its prior financing round. Conversely, a down round is one in which the price per share has declined since a company's prior financing round.

Michael Patrick, also a partner in the firm and survey co-author, said, "As reported by Dow Jones/VentureSource, aggregate venture investment was a solid $6 billion in the quarter, and aggregate acquisitions of venture backed companies was an also solid $7.6 billion in the quarter. However, IPO activity continued to be weak with only 13 venture backed companies going public, and with Nasdaq down 7% in the quarter to date, a note of caution is appropriate."

Complete survey results are posted on Fenwick & West's website at www.fenwick.com/vctrends.htm.